Commitments of Traders
Speculators abandoned 22K of their long positions and added only 1.7K shorts to their portfolios this week. They were whooping 68K net short, which qualifies for an extreme level. The last time speculators were this bearish it was back in Nov 2015 when the price moved from the double bottom at 0.70 to almost 0.80. There were few other instances of such a reversal at similar levels ( see in the chart below ) Share of open interest also jumped to 58%. I would like to see this metric coming above 60% but it is surely looking like a long term reversal in this market
This week, speculators were bullish on GBP once again. They added fresh 1.9K long positions while, at the same time they covered 6.5K of their shorts. This is a very clear bullish bias present for a 2nd consecutive week in this market. Open Interest also spiked by 18K contracts on higher prices during the week. These are all very bullish signals and suggest, the long term bottom in Cable might be forming.
The speculators covered a significant amount of short positions this week. This is the second consecutive week with them dumping shorts. Two week ago they covered 15K and this week another 13K. This accounts for 16% of their all short being liquidated in only two weeks time. They become net long after being net short for the last three weeks. Their net positions stood at 8K net long. The price action is bearish unless we clear the resistance at 1.1740. If speculators dump more shorts and start buying EUR, we might be getting larger rally but for the moment the price action must be assumed bearish.
The speculators took a significant profits last week in EUR futures. They covered 17.5K longs and 15K shorts. They were 7.2K net short, most since they became net short few weeks ago. The open interest was down first time in many weeks. The declining open interest on rising prices is a sign of a top. The recent rejection of the 1.1740 resistance can be defined as a short term top. More downside is likely in the coming weeks.
Speculative GBP shorts are slowly getting extreme. The last extreme level that caused the market to reverse from 1.20 to 1.44 was at 144K ( April 2017 ). We are almost at these extreme levels ( 140K ) this week. The missing element is the share of open interest. This metric read 52% this week. We know the GBP futures tend to reverse the trend when the share of Open Interest reaches over 60%. If speculators add more shorts next week on falling open interest, it will be a perfect long signal for GBPUSD. Lets see
Speculators covered 8.6K of their longs. This is after they added 8.9K fresh longs last week. Two weeks of positions are now cancelled out. At the same time they covered only 672 short contracts. They were 46K net short. This was up from being 38K in the previous week and 40K in a week before that. Clearly speculators like to be short Pound futures
Speculators were bearish this week and are approaching an extreme levels. They added 16K new longs and 35K new shorts to their portfolios this week. The short addition was significant and accounted for 30% of their short positions. They increased them from 100K to 130K. They were 58K net short, up from 39K in the previous week. The share of Open Interest jumped from 55% to 63% this week.
Speculators covered only few longs ( 348 ) but added 3K fresh short positions. They were almost 53K net short, up from being 49.5K in the previous week. As tehnet levels of the position didn’t change much compared to the previous week, the short positions as a % of total interest rose to 49.8%. This is the highest level since November last year. Few week before that, in May 2017 speculators held 60 % of all open interest in longs, the price of USDCAD went from 134 to 1.21. Today we are approaching a similar extreme. If this metric will reach over 58%, it will give enough reasons to believe that USDCAD will collapse in major way. Definitely the one to watch out for in the next few weeks.
Open Interest also declined by a whooping 31K. A decrease in open interest on rising prices means the current trend is running out of steam and it will soon reverse. It’s also worth noticing that now speculators hold 46% of the total open interests in short positions. This figure jumped from 31% last week and it is highest since mid April. The “tipping point” for this market comes in at around 55%. If we see this metric increasing in the coming weeks, we can expect the major turn around in this market.
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